Bid to ban income tax seen as a threat or wake-up call to state government

John P. Kelly

Thursday

Oct 30, 2008 at 12:01 AMOct 30, 2008 at 12:34 PM

Polls predict it will fail. Millions have been spent to make sure it does. From Gov. Patrick on down, officials urge in harmony: vote no on Question One. But in this economy, the fate of the state income tax seems anything but certain.

Polls predict it will fail. Millions have been spent to make sure it does. From Governor Patrick on down, officials urge in harmony: vote no on Question 1.

But in this economy, the fate of the state income tax seems anything but certain. On Beacon Hill, some say the allure of big savings – $2,773 for someone who earned $70,000 to $80,000 last year, according to the state Department of Revenue – and a distrust of state government could tempt enough voters to abolish the 5.3 percent tax, which provides 60 percent of the state’s tax revenue. The income tax produced $12.5 billion in revenue this year.

Days before Tuesday’s election, Patrick and lawmakers remain silent on how the state would react were the ballot initiative to pass. The tax would be phased out over two years.

“It would be the worst thing for this economy,” said state Rep. Frank Hynes, who is completing his 13th term and not seeking re-election.

Hynes said the state’s ability to service the unemployed would be crippled when needed most. Education programs and social services would be wiped out. The state would be unable to repair deteriorating roads and bridges.

“The whole population would suffer,” the Marshfield Democrat said.

Proponents argue that doing away with the income tax would force lawmakers to reduce a bloated budget and run a leaner, penny-wise government. Massachusetts would join nine states with no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Some speculate that property taxes will soar in Massachusetts if the measure passes. They point to New Hampshire’s higher rates. In Florida, state government is heavily reliant on the sales tax, which accounts for roughly a third of all state revenue.

Whether Patrick’s plan to cut state spending by more than $1 billion and eliminate 1,000 state jobs will help or hinder the group behind the ballot question, the Committee for Small Government, is unclear.

Although no lawmakers have publicly endorsed abolishing the tax, Republicans have seized on the ballot question as a chance to empathize with frustrated taxpayers and proclaim that drastic spending reductions are overdue.

“I think Beacon Hill is in dire need of a wake-up call. There has been a total disregard for taxpayers in the last few years,” state Sen. Robert Hedlund, R-Weymouth, said.

He pointed to stalled efforts to reform the state pension, transportation and court systems.

“We threaten to cut local aid, but we can’t touch Billy Bulger’s $240,000 state pension?” Hedlund said, referring to the former University of Massachusetts president and former Senate president.

Hedlund said he is still undecided on the income-tax issue. He accused “some of my colleagues” of publicly opposing Question 1 while saying privately that they would vote “yes.”

State Rep. Vinny deMacedo, R-Plymouth, said he opposes abolishing the tax but isn’t “defending the status quo.”

“I am as frustrated as anyone,” deMacedo said.

He said Tuesday’s arrest of state Sen. Dianne Wilkerson on bribery charges and recent reports that a Boston firefighter was collecting disability pay while competing as a bodybuilder intensified public concern about how tax revenue is spent.

Were the income taxt to be eliminated, “I honestly don’t know how you’d be able to fund state government at any level,” deMacedo said.

John P. Kelly may be reached at jkelly@ledger.com.

State has bucked voters on income tax rollbacks before

When it comes to the personal income tax, Massachusetts taxpayers have reason to mistrust state government.

The 15 percent “temporary” hike Gov. Michael Dukakis signed in 1989 proved anything but temporary. To pay off debt and address a budget deficit, the state Legislature had voted to raise the tax from 5 percent to 5.75 percent. News reports at the time said the new rate was supposed to last 18 months.

A decade later, in 2000, voters clamored for a rollback, approving a referendum to lower the rate to 5 percent over the next three years. But two years later the Legislature froze the rate at 5.3 percent, where it has stayed. It is the highest flat-rate personal income tax in the nation.

In November 2002, nearly half of Massachusetts voters at the polls voted to abolish the tax. The measure’s unexpectedly narrow defeat stunned the state political establishment.